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message from the CEO

Dear stakeholder,

Although 2012 was a challenging year for Randstad and the HR Services sector as whole, it also saw a number of positive developments in the world of work. Our industry is benefiting from the introduction of modern, sustainable labor policies in several of the markets in which we operate. These policies bring the labor market more in line with the ‘flexicurity’ model promoted by Randstad, which advocates a good balance between flexibility and security. More flexible employment relationships will drive participation and mobility in the labor market, which will fuel growth in the HR Services sector. The two most notable legislative changes in 2012 were the introduction of equal pay for temporary and permanent workers in Germany and the Netherlands, and labor market reforms in France, Italy and Spain. Naturally, not all these changes will have an immediate effect, but they will ultimately lead to better functioning labor markets, in which companies like Randstad will be able to add value.

In 2012, our revenue grew by 5% to € 17.1 billion, partly attributable to the acquisition of SFN in late 2011. The year started optimistically, but as 2012 progressed, markets became increasingly volatile. In the first six months, organic revenue remained in line with 2011. However, revenue gradually contracted in the second half of the year. Growth continued in North America, Asia and Latin America, and we continued to invest in these regions, while revenue came under pressure in Europe. This required us to set an ambitious cost-savings target of € 70-100 million. This was in a large part accomplished by using natural attrition to reduce the number of employees. Unfortunately, some restructuring was inevitable. I therefore wish to express my gratitude to those employees who have had to leave us, and thank them for the contribution they have made to Randstad, in some cases over many years.

Besides focusing on stringent cost control, we also set several strategic priorities to capture opportunities for profitable growth. First, we aim to improve our business mix by accelerating growth in Professionals, permanent placements and small and medium-sized enterprises (SMEs). Second, we are pursuing new opportunities arising from growing demand for Recruitment Process Outsourcing (RPO) and Managed Services Programs (MSP). Third, we aim to improve the quality of service to our clients by matching the right delivery model to each client in order to achieve greater efficiency and higher added value for the client. Finally, to enhance profitability, we are reassessing the value of our contracts, terminating the least profitable ones, particularly in North America and across Europe.

We maintained our solid financial position by reinforcing our focus on working capital management and by completing a refinancing process, which included the issue of preference shares C. We also secured financing for the next four to five years. Our leverage ratio was well within our target range of between 0 and 2. For 2012, we maintained our dividend policy and propose a dividend of € 1.25 per ordinary share. Shareholders will have a choice between shares and cash.

Our annual People Survey confirmed that employee engagement at Randstad continued to improve in 2012. Talent management remains one of our key priorities. Specifically, we aim to fill 80% of our management positions internally, a target we met in 2012. The appointments of François Béharel and Linda Galipeau to the Executive Board are excellent examples of our talent-management process, actively promoting internal candidates for senior management positions. Another example of making the most of our talent at Randstad is the introduction of an internal advisory board comprising managing directors from various geographies. This advisory board focuses on accelerating identified strategic projects.

In November 2012, Brian Wilkinson left Randstad after four years as a member of the Executive Board. We thank Brian for his dedication and contribution to Randstad and its predecessors over the years, and wish him all the best in his future endeavors.

Of course, we would be unable to perform without the support of our stakeholders. I would therefore like to thank our employees for their hard work and dedication, and our clients, candidates and investors for their continued trust, commitment and involvement. I look forward to a successful 2013.

Ben Noteboom